NEW DELHI: Torrent Pharma will acquire a controlling stake in JB Chemicals & Pharmaceuticals (JB Chem) in a deal size of around Rs 18,000 crore, including an open offer. This is the second largest deal in pharma space after Sun Pharma’s $4 billion acquisition of Ranbaxy over a decade back. The deal will create India’s second most valued pharma company (after Sun Pharma), with a revenue of over Rs 15,000 crore, and will be ranked among the top five pharma players. The transaction in the first phase includes Torrent Pharma’s acquisition of 46.4% stake in JB Chem from US PE major KKR for nearly Rs 11,917 crore, which will be followed by an open offer of up to 26% from public shareholders. The equity valuation of JB Chem is Rs 25,689 crore, while its market cap is Rs 28,000 crore.
As per the agreement signed between the two on Sunday, Torrent Pharma is acquiring KKR’s stake in JB Chem at Rs 1,600 per share, while the open offer is at Rs 1,639 per share. The deal price is at nearly 9% discount to JB Chem’s closing price of Rs 1,800 on June 27. KKR’s stake in the company is held through its subsidiary Tau Investment Holdings. In the second phase, Torrent and JB Pharma will be merged through a scheme of arrangement under which every shareholder holding 100 shares in JB Pharma shall receive 51 shares of Torrent. TOI in its June 28 edition had reported the deal value of around Rs 20,000 crore.About five years back, the PE major had acquired 54% in JB Chem from the promoters, the Mody family, for approximately Rs 3,100 crore, or Rs 745 per share. In March this year, KKR divested about 7% stake through block deals. The PE major has been seeking to exit its investment in JB Chem for some time and had initiated the process last year. However, negotiations with the potential bidders were stalled due to valuation concerns.In addition, Torrent is also expected to acquire up to 2.8% of equity shares from certain employees of JB Pharma at Rs 1,600 per share.The deal and merger scheme are subject to standard requisite statutory and regulatory approvals.
